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EXHIBIT 10.6
ADVANCED LIGHTING TECHNOLOGIES, INC.
Common Stock Purchase Agreement
THIS
AGREEMENT is dated as of July 27, 2005, between ADVANCED
LIGHTING
TECHNOLOGIES, INC. (the "Company"), and
Sabu Krishnan ("Purchaser").
W I T N E S S E T H:
WHEREAS,
the Company has given Purchaser an award attached hereto as
Annex
1 (the "Award") pursuant to the Company's
2005 Equity Incentive Plan (the
"Plan") and
WHEREAS,
the Award permits the Purchaser to purchase up to 17.985 shares
within 30 days of the Date of Grant
specified in the Award; and
WHEREAS,
pursuant to the Award, Purchaser desires to purchase shares of
the Company as herein described, on the
terms and conditions set forth in this
Agreement, the Award and the Plan. Certain
capitalized terms used in this
Agreement are defined in the Plan.
NOW,
THEREFORE, it is agreed between the parties as follows:
1.
PURCHASE OF SHARES.
Pursuant
to the terms of the Award, Purchaser hereby agrees to purchase
from the Company and the Company agrees to
sell and issue to Purchaser 17.985
shares [cannot exceed number of Shares
above] of the Company's common stock (the
"Stock") for the Purchase Price Per Share
specified in the Award payable by
personal check, cashier's check or money
order. Payment shall be delivered at
the Closing, as such term is hereinafter
defined. The closing hereunder (the
"Closing") shall occur at the offices of
the Company on August 1, 2005, or such
other time and place as may be designated
by the Company (the "Closing Date").
2.
REPURCHASE OR FORFEITURE OF UNVESTED STOCK.
All
unvested shares of the Stock purchased by the Purchaser pursuant
to
this Agreement (sometimes referred to as
the "Unvested Stock") shall be subject
to the following forfeiture or mandatory
repurchase requirement (the "Unvested
Stock Requirement"):
In the
event the Purchaser ceases to be an Employee of the Company as
defined in the Plan, i.e. terminates
service with the Company ("Service") for
any reason, other than a Permitted Reason,
all Unvested Stock shall immediately
be forfeited and cancelled without
consideration to the Purchaser of any kind.
If
Purchaser ceases to be an Employee of the Company for a
Permitted
Reason, the Company shall purchase the
Unvested Stock as hereinafter provided.
If any Unvested Stock is subject to a
vesting requirement which must be met by a
date certain (the "Vesting Deadline"), and
such vesting requirement is not met
on or prior to such date, the Company shall
purchase
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such Unvested Stock as hereinafter
provided. Purchaser understands that the
Stock is being sold in order to induce
Purchaser to become and/or remain
associated with the Company and to work
diligently for the success of the
Company and that the unvested Stock will
vest in accordance with the schedule
set forth in the Award. Accordingly, the
Company shall be required within 60
days after the (i) termination of Service
for a Permitted Reason or (ii) the
Vesting Deadline, as the case may be, to
purchase from the Purchaser (A) all
shares of Stock purchased hereunder which
have not vested on the date of
termination of Service in accordance with
the terms of such vesting schedule in
the Award or (B) all shares of Unvested
Stock which could no longer vest after a
Vesting Deadline, as the case may be;
provided further, however, if at the time
there shall exist any Company Payment
Condition, the Company may defer the
payment for the purchase until such time as
the Company Payment Condition no
longer exists. The purchase price for such
Unvested Stock shall be the Purchase
Price Per Share paid by Purchaser for such
shares pursuant to the Award (the
"Purchase Price"). The purchase price shall
be paid by check and/or by
cancellation of any indebtedness of
Purchaser to the Company. The Company's
rights under this paragraph shall be freely
assignable, in whole or in part,
and, following such assignment, such rights
will not be limited by any Company
Payment Condition.
Nothing in
this Agreement shall be construed as a right by Purchaser to be
employed by Company, or a parent or
subsidiary of Company.
3. ESCROW
OF STOCK.
As
security for Purchaser's faithful performance of the terms of
this
Agreement and to ensure the availability
for delivery of Purchaser's shares upon
repurchase by the Company, Purchaser agrees
at the Closing hereunder, to deliver
to and deposit with the Escrow Agent named
in the Joint Escrow Instructions
attached hereto as Exhibit C, the
certificate or certificates evidencing the
Unvested Stock and four Assignments
Separate from Certificate duly executed
(with date and number of shares in blank)
in the form attached hereto as Exhibit
D. Such documents are to be held by the
Escrow Agent and delivered by the Escrow
Agent pursuant to the Joint Escrow
Instructions, which instructions shall also
be delivered to the Escrow Agent at the
Closing hereunder.
Within 30
days after the vesting of a portion of an Award (as defined in
the Award), if Purchaser so requests, the
Escrow Agent will deliver to Purchaser
certificates (including any voting trust
certificates) representing so many
shares of Stock as are no longer subject to
the Unvested Stock Requirement (less
such shares as have been previously
delivered).
4.
ADJUSTMENT OF SHARES.
Subject to
the provisions of the Articles of Incorporation of the Company,
if, from time to time during the term of
the Unvested Stock Requirement:
(a) there is any stock dividend or liquidating dividend of cash
and/or property, stock split or other change in the character
or
amount of any of the outstanding securities of the Company, or
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(b) there is any consolidation, merger or sale of all or
substantially all, of the assets of the Company,
then, in such event, any and all new,
substituted or additional securities or
other property to which Purchaser is
entitled by reason of Purchaser's ownership
of the shares shall be immediately subject
to such Unvested Stock Requirement
with the same force and effect as the
shares from time to time subject to the
Unvested Stock Requirement. While the total
Purchase Price shall remain the same
after each such event, the Purchase Price
Per Share of Unvested Stock shall be
appropriately and equitably adjusted as
determined by the Board of Directors of
the Company.
5. THIRD
PARTY TRANSFER RESTRICTIONS.
5.1 Prior to a
Major Event. (a) Vested Shares. Prior to the
occurrence of a Major Event, the Purchaser may not transfer
vested Shares, other than by a Permitted Transfer or otherwise
with the prior written consent of the Company.
(b) Unvested
Shares. The Purchaser may not transfer unvested
Shares, other than by a Permitted Transfer.
5.2 After a
Major Event. (a) Vested Shares. In the event the
Purchaser proposes to sell, pledge or otherwise transfer to a
party other than a Permitted Transferee, pursuant to a bona
fide purchase offer, any vested Shares acquired under the Plan
or any interest in such Shares at any time after the
occurrence of a Major Event and prior to the Initial Public
Offering, the Company shall have the "Right of First Refusal"
with respect to all (and not less than all) of such Shares.
The Purchaser must give a written "Transfer Notice" to the
Company describing fully the proposed transfer, including the
number of
Shares proposed to be transferred, the proposed
transfer price and the name and address of the proposed
transferee and including a copy of the bona fide purchase
offer. The Transfer Notice shall be signed both by the
Purchaser and by the proposed transferee and must constitute a
binding commitment of both parties to the transfer of the
Shares. Such right of First Refusal with respect to vested
Shares shall terminate upon the sale of Common Stock by the
Company pursuant to an Initial Public Offering.
The Company and its assignees shall have the right to purchase
all, and not less than all, of the Shares on the terms
described in the Transfer Notice (subject, however, to any
change in such terms permitted in the next paragraph) by
delivery of a Notice of Exercise of the Right of First Refusal
within 30 days after the date when the Transfer Notice was
received by the Company.
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If the Company fails to exercise its Right of First Refusal
within 30 days after the date when it received the Transfer
Notice, the Purchaser may, not later than 60 days following
receipt of the Transfer Notice by the Company, conclude a
transfer of the Shares subject to the Transfer Notice on the
terms and conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions different from those
described in the Transfer Notice, as well as any subsequent
proposed transfer by the Purchaser, shall again be subject to
the Right of First Refusal and shall require compliance with
the procedure described in the paragraph above. If the Company
exercises its Right of First Refusal, the Purchaser and the
Company (or its assignees) shall consummate the sale of the
Shares on the terms set forth in the Transfer Notice;
provided, however, that the purchase price for such shares
shall be the lesser of the price described in such Transfer
Notice or Fair Market Value and, provided further, however, if
at the time of the exercise of such Right of First Refusal
there shall exist any Company Payment Condition, the Company
may defer the payment for the purchase until such time as the
Company Payment Condition no longer exists.
The Company's Right of First Refusal shall inure to the
benefit of its successors and assigns and shall be binding
upon any transferee of the Shares. The Company's rights under
this Subsection shall be freely assignable, in whole or in
part.
(b) Unvested Shares. Prior to a termination of Service, the
Purchaser may not transfer Unvested Shares, other than
pursuant to a Permitted Transfer.
5.3 Termination of Service.
(a) Prior to a Major Event. (i) Termination for Other than a
Permitted Reason. Following the Purchaser's termination of
Service for other than a Permitted Reason, as defined in
Section 5.3(b) below, the Company shall have the right, but
not the obligation, to purchase all or any portion of the
vested Shares of the Purchaser at any time within 12 months
following such termination of Service. Such purchase will be
at the Fair Market Value of such Shares at the time of the
exercise of such right. To exercise such right, Company shall
give the Purchaser written notice of the sale in the same
manner and with the same effect as a Compelled Sale, pursuant
to Section 5.4; provided, however, if at the time of the
exercise of such right there shall exist any Company Payment
Condition, the Company may defer the payment for the purchase
until such time as the Company Payment Condition no longer
exists. After
any such termination of Service, all unvested
Shares of the Purchaser shall be forfeited by the Purchaser
and shall be cancelled without payment of any kind.
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(ii) Termination of Service for A Permitted Reason. (A)
Following a termination of Service (I) by the Company for any
reason other than "cause," (II) by the Purchaser by
resignation with "good reason," (III) death or
(IV)"disability," each as defined in the Purchaser's
employment contract, or, if the Purchaser does not have such a
contract, as defined on Annex 2 to this Agreement (a
"Permitted Reason"), the Company shall have the right to
purchase all or any portion of the vested Shares of the
Purchaser at any time within 12 months following such
termination of Service. If such Company purchase would occur
before (a) the Purchaser has held the Shares six months or (b)
the date which is six months following the vesting of the
Shares to be purchased, the repurchase shall occur six months
and one day after the later of the purchase of the Shares by
the Purchaser or vesting, as the case may be, and for the then
current Fair Market Value. Such purchase will be at the Fair
Market Value of such Shares at the time of the exercise of
such right. To exercise such right, Company shall give the
Purchaser written notice of the sale in the same manner and
with
the same effect as a Compelled Sale, pursuant to Section
5.4; provided, however, if at the time of the exercise of such
right there shall exist any Company Payment Condition, the
Company may defer the payment for the purchase until such time
as the Company Payment Condition no longer exists. The Company
will purchase all unvested Shares of such Purchaser within 60
days of the Purchaser's such termination of Service; provided,
however, if at the time of the exercise of such right there
shall exist any Company Payment Condition, the Company may
defer the payment for the purchase until such time as the
Company Payment Condition no longer exists.
(B) Following any such termination of Service for a Permitted
Reason, such Purchaser shall have the right to compel the
purchase (a "Vested Put") of that number of vested Shares of
Purchaser, at the Fair Market Value at the time of exercise of
such right, necessary to make the aggregate consideration, for
all unvested Shares purchased pursuant to Subsection
5.3(a)(ii)(A) and the vested Shares to be purchased pursuant
the Vested Put, would be equal to the total consideration
initially paid by such Purchaser for such vested and unvested
Shares; provided however, that if the purchase of all such
vested and unvested Shares at the prices specified results in
aggregate consideration which is less than such total
consideration, all
vested Shares shall be purchased pursuant
to the Vested Put at Fair Market Value. If such Company
purchase would occur before (a) the Purchaser has held the
Shares six months or (b) the date which is six months
following the vesting of the Shares to be purchased, the
repurchase shall occur six months and one day after the later
of the purchase of the Shares by the Purchaser or vesting, as
the case may be, and for the then current Fair Market Value.
Such right shall be exercised within twelve (12) months
following such termination of Service and the purchase by the
Company
shall take place within 60 days of such exercise;
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provided, however, if at the time of the exercise of such
right there shall exist any Company Payment Condition, the
Company may defer the payment for the purchase until such time
as the Company Payment Condition no longer exists.
(iii) Company's Rights Assignable. The Company's rights under
this Section shall be
freely assignable, in whole or in part,
and, following such assignment, such rights will not be
limited by any Company Payment Condition.
(b) After a Major Event. The Company shall not have any
obligation to purchase vested Shares following the Purchaser's
termination of Service for any reason after the occurrence of
a Major Event.
5.4 Right to Compel Sale.
(a) Compelled Sale. If members of the Saratoga Group propose a
Change of Control Transaction, then Saratoga shall have the
right (whether the Change of Control results from the sale of
all, or some lesser portion, of the Saratoga Group's Shares)
to require the Purchaser (or his Permitted Transferee) to sell
all, or a Pro Rata Portion, of his Shares to the prospective
purchaser of the Saratoga Shares (if such right is exercised,
a "Compelled Sale"). If the prospective purchaser in the
Change of Control Transaction proposed by the Saratoga Group
is to acquire Shares of the Saratoga Group, but Saratoga does
not elect to cause a Compelled Sale pursuant to the foregoing
sentence, the Purchaser (or such Permitted Transferee) shall
have the right to elect to sell to the prospective purchaser,
as part of the Change of Control Transaction, the Pro Rata
Portion of the Purchaser's (or such Permitted Transferee's)
Shares (if such right is exercised, a "Co-Sale"). The
consideration to be received by the Purchaser (or such
Permitted Transferee) for each Share in the Compelled Sale or
Co-Sale shall be the same consideration per Share to be
received by the Saratoga Group, and the terms and conditions
of such sale by the Purchaser (or such Permitted Transferee)
shall be the same as those upon which the Saratoga Group sell
their Shares, except that the Purchaser (or such other party)
shall not be bound by the terms of any indemnity, hold-back or
escrow given to the purchaser in connection with such sale to
the extent that such indemnity is not limited in value with
respect to the Purchaser (or such Permitted Transferee) to at
most the aggregate consideration to be received for his Shares
in such sale.
(b) Notice and Sale Procedures. (i) The Company shall provide
written notice to the Purchaser (or his Permitted Transferee)
of any proposed Change of Control Transaction, which notice (a
"Control Transaction Notice") shall (A) set forth the
consideration per
Share to be paid by the prospective
purchaser and (B) state whether Saratoga is electing pursuant
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to Section 5.4(a) to cause a Compelled Sale. If Saratoga does
not elect to cause a Compelled Sale and the Purchaser (or such
Permitted Transferee) desires to cause a Co-Sale pursuant to
Section 5.4(a), the Purchaser (or such Permitted Transferee)
must give written notice of his election to cause such Co-Sale
(a "Co-Sale Notice") to Saratoga (or the representative of
Saratoga as may be designated in the Control Transaction
Notice) within ten (10) days following the date of the Control
Transaction Notice. Within ten (10) days following the date of
the Control Transaction Notice in which Saratoga has elected
to cause a Compelled Sale, the Purchaser (or Permitted
Transferee) shall deliver to Saratoga (or such designated
representative), or in the case of a Co-Sale, the Co-Sale
Notice shall be accompanied by, the certificates representing
the Shares held by the Purchaser (or Permitted Transferee) to
be sold in such Compelled Sale or Co-Sale, together with a
suitably executed blank stock power and all other documents
required to be executed in connection with such Change of
Control Transaction. In the event that the Purchaser (or
Permitted Transferee) should fail to deliver such certificates
and other documents as aforesaid, the Company shall cause the
books and records of the Company to show that such Shares are
bound by the provisions of this Section 5.4 and that such
Shares shall be transferred only to the purchaser identified
in the Change of Control Notice upon surrender for transfer by
the Purchaser (or any other party) thereof.
(b) If, within one hundred twenty (120) days after the
Saratoga Group gives the notice they have not completed the
sale of Shares described in the notice, the Saratoga Group
shall return to the Purchaser (or such Permitted Transferee)
all certificates representing Shares that the Purchaser (or
such Permitted Transferee) delivered for sale pursuant hereto,
together with any such other documents delivered by the
Purchaser.
(c) Promptly after the consummation of the sale of the Shares
of the Saratoga Group and Purchaser (or Permitted Transferee)
pursuant to this Section, the Saratoga Group shall remit to
the Purchaser (or Permitted Transferee) the total sales price
of the Shares of the Purchaser (or Permitted Transferee) sold
pursuant thereto, and shall furnish such other evidence of the
completion and time of completion of such sale or other
disposition and the terms thereof as may be reasonably
requested by the Purchaser (or Permitted Transferee).
6.
PURCHASER'S RIGHTS UPON REPURCHASE.
At such
time as the Company makes available, the consideration for the
Stock to be repurchased in accordance with
the provisions of Sections 2 and 5 of
this Agreement, then from and after such
time the person from whom such shares
are to be repurchased shall no longer have
any rights as a holder of such shares
(other than the right to receive payment of
such
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consideration in accordance with this
Agreement). Such shares shall be deemed to
have been repurchased in accordance with
the applicable provisions hereof,
whether or not the certificate(s) therefor
have been delivered as required by
this Agreement.
7.
TRANSFER BY PURCHASER TO CERTAIN TRUSTS.
Purchaser
shall have the right to transfer all or any portion of
Purchaser's interest in the shares issued
under this Agreement which have been
delivered to Purchaser under the provisions
of Section 3 of this Agreement, to a
trust established by Purchaser for the
benefit of Purchaser, Purchaser's spouse
or Purchaser's children, without being
subject to the provisions of Section 5
hereof, provided that the trustee on behalf
of the trust shall agree in writing
to be bound by the terms and conditions of
this Agreement. The transferee shall
execute a copy of Exhibit E attached hereto
and file the same with the Secretary
of the Company.
8. LEGEND
ON SHARES.
All
certificates representing the Stock purchased under this
Agreement
shall, where applicable, have endorsed
thereon the legends set forth in the
Award and any other legends required by
applicable securities laws.
9.
PURCHASER'S INVESTMENT REPRESENTATIONS.
This
Agreement is made with Purchaser in reliance upon Purchaser's
representation to the Company, which by
Purchaser's acceptance hereof Purchaser
confirms, that the Stock which Purch
